Germany advances reserve power plants strategy to prevent “Dunkelflauten”
Germany advances a power-plant strategy to prevent ‘Dunkelflauten’, raising auction bid caps to €244,000/MW while requiring H2-ready gas plants this summer.
Germany is moving ahead with a new power-plant strategy aimed at avoiding so-called Dunkelflauten by creating a market for reserve capacity and backing hydrogen-ready gas plants. The plan places “reserve power plants” at the centre of a capacity-market approach that will pay operators for availability rather than continuous generation. The coalition says the measure will secure electricity supply around the clock as nuclear and coal generation are phased out.
Strom-VKG bill sets legal framework for reserve capacity
The government bill, presented under the title Strom-VKG, frames the reserve power plants and storage measures as central to long-term supply security after the planned coal exit and the end of nuclear power. It requires new plants to be convertible to run on low-carbon hydrogen by 2045, Germany’s target year for greenhouse gas neutrality. Lawmakers expect the measure to create a predictable revenue stream by compensating operators for keeping capacity on standby.
September auctions and 2031 commissioning timeline
Officials intend to open the first competitive auctions in September, with winning projects moving through planning, permitting and construction over four to five years. That schedule puts initial new capacity on the grid by 2031, the government says, timed to ensure backup capacity as older coal assets retire. The auction design will focus on reliability: plants and storage will be contracted for their ability to deliver or be available when renewables fall short.
Bid caps raised to incentivize bidders
A significant change in the revised draft raises maximum bid caps for the auctions from €173,000 per megawatt-year to €244,000 per megawatt-year — an increase of about 41 percent. For illustration, a 500 MW plant could theoretically bid up to roughly €122 million a year for availability, though competitive dynamics are expected to push actual prices lower. The higher ceilings are aimed at attracting investment by reducing revenue risk for developers in a market meant to value readiness.
Battery rules relaxed to broaden participation
The draft also eases technical requirements for batteries to make storage projects more competitive in the auctions. Long-duration facilities must still be able to supply electricity for ten hours, but they are now required to deliver at least 80 percent of installed capacity rather than the former 100 percent standard. Recharging rules have been softened too: batteries can recharge within three hours between dispatches instead of the earlier one-hour threshold.
Regional allocation widened to include north and east
Lawmakers explicitly widened the geographic scope of where contracted plants may be sited, reversing concerns that a southern bias would concentrate capacity in the grid-technical south. The revised text names both south and northern locations for new plants, and parliamentary negotiators agreed to a location split that allocates about one third of auctioned capacity to the northeast and two thirds to the south. Transmission operator 50Hertz and regional utilities had lobbied for a broader allocation to reflect the loss of local generation in former lignite regions.
Industry welcomes pragmatism but warns on fuel and infrastructure
The gas and hydrogen industry has broadly welcomed the changes, saying hydrogen-ready gas turbines and storage will underpin supply security while supporting the hydrogen market’s development. Timm Kehler, head of the gas and hydrogen trade association, described the timeline and auction approach as pragmatic but stressed the need for a concrete plan to secure fuel inputs and pipeline and refuelling infrastructure. Industry groups and mining-area utilities have also pressed for clarity on how fuel supply for reserve plants will be ensured without undermining decarbonization targets.
Germany’s new reserve power plant framework draws on earlier ideas from the previous government while adding features intended to boost competition and geographic balance. Negotiators say the capacity-market payments and technical flexibility will encourage a mix of gas-fired units, batteries and pumped storage to fill gaps when wind and solar output is low. Parliament is expected to consider the law before the summer recess, setting the stage for the scheduled September auctions and the multi-year build-out that follows.
